captioning sponsored by macneil/lehrer productions >> today, i can say that our troops in iraq will definitely be home for the holidays. >> woodruff: with those words, president obama declared the iraq war all but over, and pledged to pull out u.s. forces by the end of this year. good evening. i'm judy woodruff. >> woodruff: and i'm jeffrey brown. on the newshour tonight, we excerpt the president's remarks; and margaret warner talks with white house deputy national security advisor denis mcdonough about the coming draw-down . >> woodruff: then, we ask libya's ambassador to the u.s., ali suleiman aujali, about the

questions surrounding moammar qaddafi's death and what's next for his country. >> brown: mark shields and david brooks analyze the week's news. >> woodruff: and paul solman talks to author michael lewis about his new book, a travelogue of sorts about nations hit hard by the financial crisis. >> all these different societies were faced with exactly the same temptation-- free money. they behaved radically differently from one another. why? >> woodruff: that's all ahead on tonight's newshour. major funding for the pbs newshour has been provided by: >> well, the best companies are driven by new ideas. >> our future depends on new ideas. we spend billions on advanced technologies. >> it's all about investing in the future. >> we can find new energy-- more, cleaner, safer and smarter. >> collaborating with the best in the field. >> chevron works with the smartest people at leading universities and tech companies.

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and... >> this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> woodruff: the iraq war is almost over. that announcement came from the commander in chief almost nine years after the u.s. invasion. during the 2008 campaign, president obama pledged to end the conflict. up until this week, american and iraqi officials were negotiating ways for some troops to remain after the december 31 deadline. but the two countries failed to reach agreement on legal immunity for u.s. forces who stayed on to train iraqis. president obama spoke to reporters after a private video conference with iraqi prime minister nouri al-maliki. >> today i can report that, as promised, the rest of our troops

in iraq will come home by the end of the year. after nearly nine years, america's war in iraq will be over. over the next two months, our troops in iraq, tens of thousands of them, will pack up their gear and board convoys for the journey home. the last american soldier will cross the border out of iraq with their heads held high, proud of their success, and knowing that the american people stand united in our support for our troops. that is how america's military efforts in iraq will end. as i told prime minister maliki, we will continue discussions on how we might help iraq train and equip its forces, again, just as we offer training and assistance to countries around the world. after all, there will be some difficult days ahead for iraq, and the united states will continue to have an interest in an iraq that is stable, secure and self-reliant.

here at home, the coming months will be another season of homecomings. across america, our service men and women will be reunited with their families. today, i can say that our troops in iraq will definitely be home for the holidays. the tide of war is receding. the draw-down in iraq allowed us to refocus our fight against al qaeda and achieve major victories against its leadership, including osama bin laden. now, as we remove our last troops from iraq, we'll beginning to bring our troops home from afghanistan, where we'd begun a transition to afghan security and leadership. and as we welcome home our newest veterans, we'll never stop working to give them and their families the care, the benefits, and the opportunities that they have earned. this includes enlisting our veterans in the greatest

challenge that we now face as a nation-- creating opportunity and jobs in this country, because after a decade of war, the nation that we need to build and the nation that we will build is our own, an america that sees its economic strength restored, just as we've restored our leadership around the globe. thank you very much. >> brown: nearly 4,500 u.s. service men and women have been killed in the iraq war. some 40,000 troops are there now, and about 160 military and civilian personnel will remain behind to train iraqis and carry out other duties. for more on today's aouncement, margaret warner spoke a short time ago to denis mcdonough, president obama's deputy national security advisor. >> warner: denis mcdonough, thank you for joining us. have been in talks with iraq about leaving troops there. how did that come apart. >> let me just take a step pack, margaret, and say we've been in

talks with the iraqis for many months -- years now-- about the kind of relationship we want to have at the end of this security agreement. the security agreement was negotiated and signed in 2008 by president bush with prime minister maliki. under that agreement, we were always scheduled to get to zero u.s. troops on the ground in iraq at the end of this calendar year. so we made a determination that we would-- the president would live up to that agreement, but always keeping open the option in the event that the iraqis asked for an additional presence after that time that we would keep them there. obviously, with appropriate protections. but woe also wanted to make sure that we had a goal, not of maintaining people on the ground but, rather, a goal of protecting our interests and the kind of relationship we want going forward. this isn't a question of what we were able to get or not able to get from the iraqies, but, rather, this is a question of what we decided, what the president decided, and what the

prime minister decided was in our interest for the relationship going forward. we have the kind of relationship now that's multifaceted, allowing security and training, but also allowing us to get back to the normal relationship that we have with governments all around the world. so i just want to not leave the impression that somehow this is a question of not having gotten immunity and, therefore, we made a course change. in fact, the decision here was what is the kind of relationship we want to have going forward? how would we be able to get back to a normal relationship iraq, like that we have with other countries around the world? and that's why the president made the decisio he made today. it's not because of something the iraqis did or did not do. >> warner: are u.s. military commanders on board with this? >> absolutely. i mean, we've been working-- actual low, i was just in baghdad over the weekend. we, obviously, are working very closely with our commander on

the ground, with our ambassador, and i think they feel very good about something that we should all, frankly, feel quite good about-- namely, the partnering, the training, and the operations that our troops have carried out jointly with iraqi security forces over the course of these last several years. that effort has knotten the iraqis into a position where they can take over for themselves themselves. every assessment we've done has said on the threats against which they need to be most ready soonest, they are ready to go. the fact is they've been carrying out internal security operations now over the course of a couple of years and doing it quite well. >> warner: now, will u.s. special forces remain for counter-terrorism operations? >> no. >> warner: so there really will be absolutely no troops, except this hand full, this 150? >> what we'll maintain is a standard marine security detachment associated with the embassy. we have marines at our embassies all around the world, very small

number, to provide some initial security there for our people. there will be about 160 military personnel associated with what's called the office of security cooperation in iraq. this is a training operation that will provide the iraqis the kind of training that they'll need on new weapons systems that they'll be purchasing from us, to include, for example, the f-16 fighter jets that they bought from us last month. so we'll have a very small presence there, as we do at embassies arounded world. then we'll provide for periodic exercises in naval exercises, air force exercises and other things. but we'll negotiate those with the iraqis and do them, frankly, the same way we do with them with other allies around the world-- with the egyptians, with jordanianes, the colombians and otherring. >> warner: your own commanders in field have said a lot of

these recent spectacular rock and bomb attacks are actually the work of iranian-backed shiite militias who wanted the u.s. to leave by the deadline. is there a danger here that iran can see this as some sort of victory, this decision? >> boy, you know, there are all sorts of victories, i guess, for iranians, but when you consider the fact that the iranians are now more isolated than they ever have been. they're seeing their economy weaker, and, obviously, unable even to live up to its basic responsibilities in the international community, be that human rights, be that nuclear responsibilities, or as we learned last week, margaret, their inability even to live up to their basic requirement to protect diplomats. i think that the iranians are in a situation where they're exceedingly weaker, where they're isolated. and so i don't spend a lot of time worrying about exactly how they'll exploit the situation. the iraqis don't want to be under the thumb of of the

iranians any more than frankly many the arabs people want to be under that regime. at the end of the day we think the iraqis are ready to stand up on their own here and we think it's a good opportunity for them to do that. >> warner: one final question, actually, about libya, how concerned are you, the u.s. administration bhow qaddafi was killed, and do you think there should be some sort of investigation, international investigation? >> we're still trying to catch up with the facts from on the ground there. it's quite haze neterms of what exactly happened. we're concerned about the situation in libya. that's why we took the steps we did from day one as related to the president's courageous and bold, frankly, decision to lead the international community in the effort we did earlier this spring. as it relates to precisely what happened yesterday, we're still getting some of the details. we're waiting to hear additional details from nato. but i'm not going to get ahead of those facts right now and announce any particular

decisions from the administration, margaret. >> warner: deputy national security adviser denis mcdonough. thanks so much. >> thank you. >> woodruff: still to come on the newshour: libya after qaddafi's death; shields and brooks; and nations still reeling from the financial crisis. but first, the other news of the day. here's hari sreenivasan. >> sreenivasan: qaddafi's death also empowered anti-government protesters across syria today. demonstrators filled the streets of homs and other areas after friday prayers. they shouted slogans warning syrian president bashar assad his turn is coming. but syrian forces opened fire on the rallies, killing at least 24 people. in all, more than 3,000 people have died in the now seven- month-long crackdown. for a second day, secretary of state hillary clinton delivered a blunt warning to pakistan over its anti-terror efforts. newshour correspondent kwame holman has our report. >> holman: the secretary of state renewed u.s. demands that

pakistan crack down on militants endangering american-led efforts in afghanistan. >> terrorism is a challenge we share, and we want to work together to root out all of the extremists who threaten us, including the taliban and the haqqani network. we should be able to agree that, for too long, extremists have been able to operate here in pakistan and from pakistani soil. >> holman: the haqqani network is a particular focus, blamed for ongoing and deadly attacks on u.s., nato, and afghan forces. it operates from pakistan's borderlands and is believed to be behind recent spectacular attacks in kabul: on the u.s. embassy last month, and on a high-profile hotel in june. but the secretary did confirm today that the u.s. had sought to open talks with the militant group this summer, much as the u.s. has pursued negotiations with the taliban. but she also said the haqqani effort did not progress past

initial contact. the secretary led an unusually high-level delegation to pakistan, accompanied by the director of central intelligence, retired general david petraeus, and the new chairman of the joint chiefs, general martin dempsey. it's been a rocky stretch for u.s.-pakistan relations, with alleged ongoing pakistani support for militant groups; strategic wrangling over afghanistan; and the mission to kill osama bin laden inside pakistan having frayed ties between the two nations. nonetheless, the americans brought a stern message to pakistan's president, prime minister, and their powerful intelligence and military leaders. secretary clinton previewed that message yesterday in afghanistan after meeting with president karzai. >> they can either be helping or hindering. >> holman: today, clinton reiterated that at a town hall- style meeting in islamabad, and again assailed pakistani support for extremists.

>> but no policy that distinguishes between so-called "good" terrorists and "bad" terrorists can provide long-term security. and pakistan has the opportunity to show regional leadership by ending the insurgency on both sides of the border. >> holman: clinton's trip continues with visits on to other regional players with a stake in the afghan war, tajikistsan and uzbekistan. >> sreenivasan: floodwaters began to gradually seep into bangkok, thailand, today as several canals were opened north of the capital. the thai government opened the floodgates to relieve the build-up of water outside the city andive the water a path to the sea. in the commercial heart of the city, workers stacked sandbags preparing for the worst. and people living on the lower floors of buildings began moving their belongings higher up. democrats in the u.s. senate moved on to the next piece of president obama's jobs bill today. it's a $60 billion investment in infrastructure projects, like roads and bridges.

the initial piece of the broken- up jobs bill-- a measure to boost the hiring of teachers and first responders-- failed last night. all republicans and a few moderate democrats opposed it. president obama signed three trade deals into law today with south korea, colombia, and panama. the three deals took years to negotiate, and faced opposition from three-quarters of democrats in the house, who voted against the measures. the deal with south korea alone could boost exports by $10 billion, erasing the current trade gap. finance ministers from the eurozone met in brussels today to hash out how they will strengthen a bailout fund for 17 member countries. they have agreed greece will get its next batch of bailout loans, likely in the first part of november. more meetings are set for this weekend, and then a second summit is scheduled for next wednesday, when the bulk of decisions are expected. on wall street today, anticipation of the eurozone meetings pushed stocks higher. the dow jones industrial average gained 267 points to close above

11,808. the nasdaq rose nearly 39 points to close at 2,637. for the week, the dow gained more than 1%; the nasdaq fell 1%. rupert murdoch's media empire has agreed to pay over $3 million to the family of a murdered itish schoolrl. milly dowler disappeared in 2002 and was later found murdered. reporters from murdoch's now- de world" tabloid had hacked into her voice mails, giving the family hope she was still alive. another million and a half dollars will go to charities chosen by the dowler family. the governor of ohio, john kasich, announced plans for a new law cracking down on exotic pet auctions. the move comes three days after a man in zanesville freed dozens of tigers, bears, and other wild animals from his farm before committing suicide. police had to shoot and kill most of the animals to protect the public. ohio has faced widespread criticism for having some of the

weakest exotic pet regulations in the nation. those are some of the day's major stories. now, back to jeff. >> brown: and we turn to libya, one day after the death of moammar qaddafi. islamic tradition dictates the dead should be buried within 24 hours, but burial for the former libyan leader was delayed amid questions surrounding the sequence of events yesterday. bill neely of independent television news is in tripoli tonight. his report begins with the scene in misrata, where qaddafi's body has been taken. >> reporter: qaddafi was a showman in life, but he could never have dreamed he'd be a show in death. crowds of libyans lining up to film and photograph his dead body on a bloody mattress. his last minutes alive were deeply humiliating. here colonel qaddafi is being led away into a furious crowd. "don't kill him" shouts one of his captors. "we need him alive." in fact, he didn't have long to live.

qaddafi falls to his knees. he is clearly being struck. the crowd shouting insults. video seems to contradict the government's account that he was shot dead in cross-fire. not far away in sirte, his son seems relaxed, a prisoner granted a cigarette. but he, too, didn't have long to live. "this is the only senior loyalist who appears to have survived from sirte, the internal security chief, who says qaddafi came to sirte in august, hiding out in a flat, and taking no part in the fighting. the people taking photographs of the tunnel where qaddafi was found hiding don't care how he died. for them, it's enough that he's gone. they were celebrating on the tripoli square where so often qaddafi addressed obedient

crowds. now they're just savoring their freedom. >> you know that feeling that you get? you get everything that you wanted. >> i lost two brothers. was it worth it? >> yes, 100%. >> finish, finished, he is not here, you understand me. it's very nice. >> reporter: this is the first full day in 42 years that libya has been free of colonel qaddafi. most of the people in this square, in this country, have never known any other leader. most of his family and friends are now either dead, fled, in hiding, or injured. what follows him, what comes next is for another day and that will be hard, but for now, this is simply a day of celebration. there are calls for an investigation into qaddafi's last minutes. libya's new leaders insist he was not executed. but they couldn't control their fighters, and, of course,

qaddafi couldn't, either. his command had already ended here as his life was about to. >> woodruff: itn's lindsey hilsum traveled to the coastal city of misrata, where she talked to some of the men who captured the one-time leader. >> reporter: the fighters who found colonel qaddafi prayed in a misrata mosque today. one was wearing the watch he took from the body of the defense minister. they are the men of the moment, credited by most libyans for bringing 42 years of dictatorship to an end. >> ( translated ): i saw him face to face. he was bleeding and not fully conscious. i jumped on top of him. i captured him in seconds. for the first time in my life, i saw him in the flesh, after nine months of war in which so many have died. he sounded just like he does on tv, and he said "what's

happening?" >> reporter: the brigade that captured qaddafi say this phone was in his possession. they say a call was made to it after they captured him. it was a woman calling from syria. and they also found this-- they say this is magic. this is an amulet that he used to protect himself. the u.n. high commissioner for human rights wants an investigation into how colonel qaddafi died, but the men there say, in the end, it doesn't matter. they say they didn't kill him; they captured him and put him in an ambulance. they didn't quite know what happened next. but what's most important to them is that he's gone. back at the base, they were showing off the paraphernalia found on the leader-- his shoes, scarf, rifle, and his solid gold pistol, engraved and decorated saying "the sun would never set"

on his rule. >> brown: today, a spokesman for the united nations office for human rights said a full investigation is warranted into qaddafi's death. meanwhile, libya's transitional council is expected to officially announce the nation's "liberation" this weekend, and soon after, to form a new interim government. joining me now is libya's representative in washington, ambassador ali suleiman aujali. welcome to you. >> thank you. >> brown: first, the celebration. this must be a profoundly happy moment for you and your country. >> exactly. it is the day we were waiting for, for a long, long, long time. i very proud of the people who made the dreams of libyans, who have been suffering last 40 years, happen in eight months. >> brown: now the questions that are out there about how korm qaddafi died, given the video we're seeing, does your government still believe he was killed in a cross-fire in battle? >> that is a statement made bilet prime minister.

this is a battlefield, jeff, as you know. you can't control, really, where the bullet is coming from. and he was arrested. he was injured. but the main thing for libya now, the book of qaddafi come to the end. now, of course, the libyan people, the international community, libyans wanted to ask him, where are our beloved ones? what happened to them for last 40 years? there are many serious questions to be asked. but this is what happened, unfortunately. >> brown: but the questions that it calls for now an investigation, do you think it is important to know how he died and to have it investigated? >> well, i think an investigation doesn't hurt because it is required.

now we are a democratic country and we have to prove to the world that we are carrying out our responsibility. of course they will carry this investigation if they find it is necessary without a request from any organization or any country. >> brown: and thent c, the transitional council said the decision on when and where to bury him seems to be on hold pending these questions. >> it looks like maybe after this concern was raised, the burial will be delayed for one day. >> brown: one day you think? >> it looks like. >> brown: but you're not sure. >> at this moment, i'm not sure. >> brown: as to the big question of what comes next, what do you see as the most important priorities for the interim government? >> there are many. the challenges are great. but to have the confidence of these people who managed to unite for eight months, in the

time of war. they will be able to also unite in the time of peace. the challenges now facing them is the injuries and you know that secretary clinton, she was in libya, and there is american initiative that maybe a ship hospital, maybe hospitals in europe. this is the challenge number one. number two, the security of the country. i believe they have to do something urgently, and as soon as possible. we want libya to look a little different after qaddafi's death and they have to move quickly. we don't want to see weapons hanging here and there. of course, the expectation of the people is very high. and something has to be done very quickly to better the lives of those who have suffered for a long time. >> brown: of course, the question is whether the

government is strong enough to do this. whether the institutions exist to move to a so-called new libya, or whether the divisions and factions and old hatreds and tensions will be unleashed now. >> i can tell you the libyans, they've never been united under qaddafi since this moment. qaddafi makes them unite against him. and they sacrificed for democracy, for dignity. now there are no institutions. the institutions made under qaddafi were to serve qaddafi himself. but to get the right money for what we need to do is another challenge. but the friends who stand beside us in the time of war, the united states of america, nato, arab countries-- all they are ready to help in the time of peace. and i think this experience of libya to be taken care of by the

international community. >> brown: there are a lot of of weapons, a lot of armed people, a lot of militias who will now somehow have to unite. one of the questions out of how qaddafi was killed, is whether the government can control these militias and bring them in, somehow. >> yes, we can. >> brown: you can. >> with education, with the resources we have-- before there were no resourcesources -- we'vn able it present libya as a modern small country which can do many things. now, we have oil. yes, we are not producing it as we used to be. but we have the libyan people who came out united from this

war. and the will of the world to get rid of this dictatorship. i think all will work together for libya and the future. >> brown: briefly what, do you want from the u.s. and the international community at this point? >> i think i need from them-- and i would repeat all of this-- that they stand beside us, with us, in the war. we want them to stand with us in the peace to help us to process the democracy, to help us to secure our country, security is very important. it is a very big country with a very long border. we have to get rid of the weapons. we have to get rid of the missiles where you find everywhere you go, qaddafi had them in different places. we need training for our police, for our army, for our technicians. and the other thing, i think, also, we have to make them

available for thent c, after the government has been formed. >> brown: ali suleiman aujali of libya, thank you very much. >> woodruff: and to the analysis of shields and brooks-- syndicated columnist mark shields and "new york times" columnist david brooks. >> thank you, judy a lot of international news. all the troops will be home by the end of the year. reactions? >> excessive, imprudent. it had been widely reported our military leaders on the ground wanted to keep 14,000, to 18,000. it has been reported that the iraqi military has basic gaps. to transport, to do air power, intelligence, to do training, which the u.s. was helping.

iraq is still a fragile country. michael hanlon points out in half the case where's there was a civil war, they slide back into civil war. so i think for all those reasons it would have been prudent to keep 14,000, not in combat roles, but in the sort of stabilizing role. the thing that mistifies me,ig, right now is denis mcdonough, who was on the program earlier, a fantastic civil servant, public servant, and a very smart guy, gave a picture of iran and iran's influence in iraq that suggested iran was weak, and not really-- >> woodruff: and isolated. >> yet other people i have spoken to in the government paint a completely opposite picture. so i'm confused about iran's capacity in general and particularly in iraq. >> woodruff: mark, mcdonough also said that the generals are on board. i mean-- >> he did. >> woodruff: he suggested the president is doing what the generals agree with. >> he did say that, and don't we

hear a general say something to the opposite. it just strikes me, judy, we stand in stark contrast between the two countries involved in the headlines this week, iraq and libya. i mean, iraq, where the united states invaded and occupied for nine years, and where there is increasing or undiminished animosity towards the united states and our presence there on the part of the iraqis. libya, where there were no american troops on the ground, and where, as of today, there's considerable appreciation. i mean, nothing personal by, this but i've heard a number of people say we've got to be worried about iran now. and i think it ill becomes those who are the architects and advocates and apologists for the united states invasion and occupation of iraq now to raise the flag about iran being an object of concern. if that was their paramount consideration, then saddam hussein was your guy. he was the guy who kept--

>> woodruff: because he stood up. >> because he stood up to iran. i mean, there was a clear understanding that iran's influence was going to grow and grow. it has. there's no question about it. >> woodruff: how do you-- >> well, a couple things. first, the warning about iran is not a neocon fantasy. the obama administration warned about iran, the french government, the german government. iran is a rogue nation. the entire world, with the exception of maybe one or two nations, has rallied against. and so i think the-- it's not a neocon fantasy that iran is a very aggressive state. as for what's happened across the middle east over the last several years, one of the things that's happened-- and to me this is the big thing that's happened-- look at the change. look in the change in leadership across that region. qaddafi's gone, saddam is gone, in afghanistan the taliban is gone. assad is toppling. >> woodruff: tunisia.

>> tunisia. we've seen this tremendous change. to me that's a big story. whether it turns out well or ill we'll see but that is a tremendous change. >> a tremendous change but let's get one thing-- there's a marvelous term in logic-- post-hawk, and not proctor hawk. because something happened after something was not because of something. saddam hussein falling was because the united states moved in and occupied and invaded a country that did not pose a threat to the united states, did not have weapons of mass destruction. the united states did not play an active role in the arab spring. it occurred without us and without our active involvement. >> woodruff: just to pick up on david's first point that the u.s. shouldn't be leaving, the generals appeared-- were reported to be saying leave more troops there longer. that seems to be what the republicans picked up on today. mitt romney says it was an astonishing-- i think he said astonish failure to secure an orderly transition.

is that a criticism-- >> i mean, we've reached a point now where the president gets absolutely unremitting criticisms from republicans, with the exception of john mccain. i mean, john mccain did salute the president for his leadersh leadership, achievements in libya. but other than that, i mean, you can-- they opposed the united states involvement in libya, or they supported it. mitt romney was for a no-fly zone and wasn't for a no-fly zone. you know, he's an interesting man. he's an able man. his credentials on foreign policy are as good as mine on ballet. >> woodruff: you both have brought libya into this. we've seen this dramatic story. bee just heard jeff interview the ambassador. david, is this a victory for the obama administration or not? what happened.

>> i think a personal victory for the president. there were many people in administration, a person i have respect for, robert gates-- department want to do it. the europeans just wanted to do a no-fly zone and the president said he have to be more aggressive and use air power and drones and we have to do regime change. we have to use military means to topple the regime. and he pursued that policy. it took a little longer than he thought but he pursued it well. he made it so the u.s. was not the center of the policy but qaddafi and the libyan regime of the the center of policy and he saw it through. i think on the whole this has been an extremely well conducted-- >> woodruff: excuse me, does that translate, mark, into something that helps him in next year's election? >> it was not a flawless policy. the constitutionality of it remains an open question. he bet on the congress being supine and just ignoring the war powers act and he was right. the congress was submissive, docile, it was not involved, took no responsibility. we went strayed ahead and the

widespread use of drones is still an open question. was it effective? yes. is it a long-term strategy that is going to work well for the if united states around the globe? i think that's very much an open question. in libya, yes. >> woodruff: and what about in terms of next year? >> in terms of next year? it's already worked for the president in terms of the wall street general/nbc news poll when the president got dismal marks on his handling of the economy, on a 2-to-1 margin they gave approval on his handling of terrorism. but it doesn't make a difference when it comes to voting next year. it has diminished the liability of the democrats as other party that is sort of soft on national defense. i don't think that argument can be made. >> woodruff: glued and which is something hillary clinton went after obama on the campaign. what do you think? do you agree with mark?

>> i think it may make a difference. he's had a very good run on foreign policy, and i think that we're going to have foreign policy issues arise in next october, next september. it's unimaginable to me that somehow the middle east won't come back. the middle east will come back, and i think he's been pretty strong, and i think the republicans feel, even mitt romney, who is the most plausible candidate, is not exactly a foreign policy-- you don't look to him for foreign policy so there's an advantage there. and presidential elections, foreign policy tend to make a difference. until recently it was the major issue for presidents. i'm beginning to think that, you know, i thought it's the economy, it's the economy. i'm beginning to think the foreign policy issue will loom large. >> woodruff: there was another republican debate this week, the rumble in las vegas some called it, mark. did it have a material effect? it was pretty feisty? >> i thought i was watching the combination of two reality shows on cable, the "housewives of jersey shore." i mean, it really got kind of nasty and a little spiteful and

we saw the unflappable, the pretor naturally unflappable mitt romney flap, where he reached across-- >> woodruff: i don't, he's ever done that. >> and i have to smile-- >> i'm a little afraid now. >> but the other thing was rick perry, they took him off the decaf. he showed up with three double lattes and he was very much involved, engaged. whether in fact he helped himself or maybe just shook up romney, i don't know. >> woodruff: he took romney on on whether he had hired illegal immigrants to cut the grass. >> i think as was written today, one of romney's hair moved a millimeter. >> i think they took down romney. i don't think they helped themselves, anybody. romney, even in his worst debate so far, to me still remanld the only plausible candidate.

so they hurt him, there's no question. but you didn't go through that debate and think perry, he's pretty good. you think, he landed some blows. so i still think it didn't fundamentally alter the race. it just made romney look a little lesimpressive. >> woodruff: how do you think it hurt him, romney? >> the flip flopping-- these are issuees, believe me, he ain't seen nothing yet. obama is going to go after him in a big major way, turn romney into the john kerrey, that the bush campaign ran. they're going to run that kind of campaign. but the flip flopping on health care, and those issues-- which they've spent a lot of time on. that's going to be a big issue. and romney has to-- you know, he's obviously been preparing for this, for a lock time, preparing for the bane capital attacks. and he's got a little better job of responding. >> kelly anne conway, the republican pollster told the "wall street journal," what romney has to do is explain his epiphanies, how he moved from

being a prochoice republican and progay rights to the point where he is against same-sex marriage in any form and now is ardently prolife. he's got to give some explanation, which is-- to say what he's gone through, and sort of give the sense of this is-- this is how i got to where i am. this is the voyage i've taken. >> woodruff: just quickly, in the last 40 seconds, herman cain, he still lives in the campaign? he's still leading in a couple poles, david. >> it's just-- it's like an entertainment ship. the ratings are waning. he doesn't have substantive policies. he doesn't know anything about foreign policy. the 9-9-9 plan is not politically saleable. >> i think herman cain is the remarkable story of this campaign in the sense for months he was at single digits. he quintupled in a month and a half and he did it because at a time when people are absolutely pessimistic, terminally pessimistic about their children's future, their own

future, their country's future, their family's future, he is this sense of optimism and his politics of biography, the son of a chauffeur, the son of a maid, a cleaning lady. i mean, a total bootstrap story. politics of biography does count. he's irrepressibly optimistic and he speaks in a language that was so unwashingtonnian. i agree with david, he's very short on substance and she's short on campaign structure but he has touched something on the republican side when not having held any office becomes an asset in an anti-politician year. >> woodruff: nothing short on substance with the two of you. mark shields, david brooks, thank you. >> brown: finally tonight, a trip to europe in search of the sources of the debt crisis. as we reported earlier, european finance ministers approved a new

batch of bailout loans for greece today. but they put off some even bigger decisions about troubled countries and banks, and the very future of the euro. a new book explores the roots of the problem, and newshour economics correspondent paul solman has the story, part of his reporting on "making sense of financial news". >> reporter: "liar's poker," "the blind side," "the big short"-- all by michael lewis, whose new much-hyped book about global debt is called "boomerang." we rendezvoused at an aptly named washington restaurant, old europe. "boomerang," why "boomerang"? >> it's an image that captures the spirit of this moment, that this money was thrown out in hope and it's coming back in anger. >> reporter: germany, greece, ireland-- these major players each get a chapter and a sweeping character assessment. the book starts on the first to go belly up, iceland, a nation of 300,000 that turned itself into banking hub, recycling

the world's money to icelanders themselves-- a breed apart, says lewis. >> they borrowed money to go acquire things-- indian power plants and danish newspapers and british soccer teams. and they told themselves a story that icelandic history and culture and dna leaves us very well-suited to being investment bankers. >> reporter: you refer to them as "inbred". >> well, they are inbred, and they have a sense of themselves as genetically special and a history of risk-taking because they make their living on the high seas fishing. assets generally rose in value during this period, and so it looked like they actually knew what they were doing. >> reporter: and then it inevitably came a cropper. >> yes. the triggering event was lehman brothers going down, and people all of a sudden rediscovering risk and being afraid of who they lent money to. >> reporter: but they've done okay, right? >> it's not a happy story. it's a little happier because they walked away from a lot of their debts, but they're not okay. i mean, they're a society that's in a deep economic slump and

still with some debts. >> reporter: meanwhile, in debt- drenched greece, lewis claims, public workers and tax-dodging citizens have helped discredit government itself. >> the reason the greeks don't pay taxes is they don't trust where their taxes are going, because they know these other greeks are taking money from the state for doing nothing. so it's... it's an essentially corrupt society. a greek tax collector will tell you the way you get fired in the greek tax collection service is by collecting taxes, that if you do it too well, they put you in a back office somewhere. and that you're allowed to take bribes not to collect taxes, but you can't do your job well. >> reporter: you've used the line that greece is a society in "total moral collapse." >> this comes to me from greek people. i didn't make that up. they'll tell you that themselves. but what they'll say is, "i'm the only upstanding greek. all these other people are cheating." that... that's the attitude.

>> reporter: ireland, they borrowed money from abroad and then invested it back in ireland. >> yes. the irish turned in on themselves and bid up their own land prices in the most extraordinary ways. you drive the countryside in ireland and they call them "ghost estates," but there are hundreds of these little villages, basically, that are brand new and uninhabited; that were built, i suppose, with the idea that, at some point, there would be massive immigration into ireland. and the irish people stepped in and guaranteed the banks, and committed to repay sums they can't afford to repay, and essentially committed themselves to generations of suffering. >> reporter: why? >> i think there's this catholic guilt there. but i also think something else... and this is speaking as someone who's had intimate involvement with irish catholic families. there's a certain status to suffering in ireland, that the person who... if you're sitting

around a table, the person with the greatest status is the person who had the most horrible thing happen to them most recently. another way of looking at it is that they've just owned up to obligations, that we're responsible for this and we're going to pay it back. >> reporter: germany. germany is like the parent that co-signs the loan for all the rest of the kids of europe. >> i always think of it as the rich man who thought he had a prenup, and then discovers that the prenup doesn't work. >> reporter: the prenup is that no bailouts... >> "if you borrow money you can't repay, it's not our problem." that was the deal germany cut going into the euro. >> reporter: and now the germans go, "oh, my goodness, what did we do?" >> the germans got fooled a little bit. but it wasn't just that. the germans made just about every bad investment you could have made in the last ten years. they invested in icelandic banks, they invested in greek government bonds, they were

heavy into irish banks, big in the irish banks, and they bought u.s. sub-prime mortgage bonds. >> reporter: lewis' controversial explanation is a german love of rules. the rules said triple-a investments were safe. since they weren't, germans are now being asked to protect their own banks from ruin by bailing out the borrowers, like greece. lewis claims a deep national neurosis was at work. >> there's a wonderful little book called "life is like a chicken coop ladder." and it was basically about purity and impurity, and the germans had this tendency to get themselves in a position, kind of getting right up next to the impure, right up next to the dirt without getting themselves too dirty. and i realized i was reading a story that explained their relationship to the current financial mess. they didn't borrow a lot of money. the german financial people, though, kind of crept right up to all the filth in the financial system, with... with

some fascination i think. and... and a little mud splattered on them. >> reporter: now, you probably won't be surprised to hear that such statements have been met with skepticism, even scorn. several european embassies turned us down cold as interview venues. we tried to get into a couple of these embassies, and when they heard it was you, they would not let us in because you had unfairly stereotyped them, stigmatized them. >> i would like to think that the stereotypes are original. i don't deny the charge, but i'd like to think i invented the stereotype. >> reporter: isn't it dangerous to be coming up with stereotypes that take a whole people-- in the case of germans, 60 million or 80 million people or something-- and assigning them a national character? >> so, i think you've got to ask-- all these different cultures, all these different societies were faced with exactly the same temptation, free money.

you're alone in a dark room with a pile of money. they behaved radically differently from one another. why? it seems pretty obvious the cultures are very different. the problem with the euro is that the cultures they welded together are pretty different. why can't you say it? >> reporter: but lewis doesn't just focus on the debt and cultures of old europe. he ends his grand tour back in america. >> the vicious cycle that is bringing down european states is not going to hit us, at least not for a while, at the level of the federal government. the same cannot be said for state and local governments. >> reporter: and you describe vallejo, california, as the example of the place where this has already happened. >> it's starting to happen. vallejo, california, was the first city in california to declare bankruptcy. and it was like a lot of cities in california-- bankrupted, essentially, by deals that it did with its public safety workers for big pensions-- very greek-like thing. >> reporter: but ultimately different from places like

greece, says lewis, because of america's national character. >> when an american declares bankruptcy, when he hits the bottom, he can reinvent himself. there's a story he can tell. we tolerate reinvention, we encourage reinvention. that's what this country has that europe has not-- it's not just a crisis, it's an opportunity. >> reporter: and that's how you end the book. >> yes. >> reporter: with the optimism that we can somehow use this as a way to recreate ourselves. >> it's an idiot optimism, but it's optimism. >> reporter: optimism that, though borrowing binges boomerang back on you, america at least will emerge bruised but unbroken. >> woodruff: again, the major developments of the day: president obama announced one of the longest conflicts in u.s. history is winding down. all u.s. troops will be withdrawn from iraq by the end of the year. the burial for former libyan

dictator moammar qaddafi was delayed amid questions over the circumstances of his death. online, there's more about the new era in libya. hari sreenivasan has the details. hari. >> sreenivasan: how will the victories on the battlefield translate into a stable, democratic government? we pose that question on our world page. and this week's edition of "need to know" looks at the future of nuclear energy in the u.s. at least one scientist believes using more of it would be the fastest way to reduce carbon emissions in the atmosphere. there's a link to that story on our web site. all that and more is on our web site, newshour.pbs.org. >> brown: and again to our honor roll of american service personnel killed in the iraq and afghanistan conflicts. we add them as their deaths are made official and photographs become available. here, in silence, are nine more.

>> woodruff: and that's the newshour for tonight.

on monday, we'll look at the first free elections in tunisia, where the arab spring uprisings began. i'm judy woodruff. >> brown: and i'm jeffrey brown. "washington week" can be seen later this evening on most pbs stations. we'll see you online, and again here monday evening. have a nice fall weekend. thank you and good night. major funding for the pbs newshour has been provided by: ♪ ♪ ♪ ♪ ♪ ♪ moving our economy for 160 years. bnsf, the engine that connects us.

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